Foundations of Strategy

Some traditional universities may be in a precarious position now, as new educational providers make inroads[2], new content providers make educational materials available more conveniently and cost effectively, and technology enables unbundling and greater individuation. The changes that have occurred in the higher education arena over the past decade – and those that are currently unfolding – have made formulating effective strategy more important for the long-term success of any university.

So what is strategy, exactly? As mentioned in a previous post[4], Michael Porter talks about strategy not as doing something better than your competitor, but doing something different. Strategy is about changing the nature of competition away from costly head-to-head battles over existing markets and clientele to creating something different, aligning processes behind it, and therefore changing the rules of the game.

And for higher education, there’s no time like the present to start thinking about changing the game.

There are several components to consider when setting strategy, and I’ll start off this series of posts with one of the biggies: demographics.

Demographics matter a lot in formulating strategy, as subtle changes over time stack up to significant shifts over a longer period of time. And this is exactly what we’re seeing throughout the world, which will impact demand for higher education across the globe.

For example, Japan has an aging population and lower demand for tertiary education. India has the opposite issue, as this country will soon be home to nearly one quarter of the world’s working age population – their “demographic dividend.” However, to cash in this dividend, India will need to educate over 400 million people under the age of 18. Perhaps an opportunity for US-based schools to help?

And throughout the world, lifelong learning is taking center stage and the “traditional” 18-24 year old student of yesterday has given way to the “new traditional” student of today. This student is likely to be older, working at least part-time, have attended at least one other school prior, and interested in programs that lead to stable, lucrative careers. Creating educational offerings for this audience involves understanding this group, how they differ from other audiences in terms of values, needs, and preferences. Clearly areas where marketing can help.

In the US, the population is growing and also shifting. According to the US Census Bureau[5], the US population will grow from an estimated 310 million people in 2010 to 341 million in 2020 (a 10% increase) to 439 million in 2050 (a 42% increase over 2010). And during this time, the percentage of people under the age of 18 (the traditional market for higher education) will decline from 24% to 23%, and the percentage of 25-44 year olds will decline from 27% to 25%. So both the traditional and new traditional markets will decrease as those in the 65 and older group increases from roughly 11% to nearly 19%.